Mr Major’s Briefing en route to Tokyo – 18 September 1993

Below is the text of Mr Major’s on the record briefing on the plane to Tokyo on Saturday 18th September 1993.

MICHAEL PERRY (UNILEVER):

We have a good team of businessmen in this group as you have seen and that in itself is unaccidental; what it describes most fundamentally is the value we place on a visit of this nature in the company of the Prime Minister at this sort of time. This is a time of enormous change in Japan, as you will be aware, a new government, new thinking, massive economic problems, new kinds of problems for them, a determination to drive through improvements and changes in their own balance of trade and payment patterns, recognition of the serious problems they have got in dealing with their trading partners and Britain over the last five or six years has been seeking to achieve progress in this area through rather different means from our American friends; we sought to persuade them about our role as their best friends in Europe in terms of inward investment and looking to build partnerships within Japan.

What has happened is that most of the formal barriers of trade have now disappeared; there are one or two issues still around but they are really quite minor; they are matters such as whisky, leather, shoes. What is much more important is the Japanese propensity to buy foreign. This is cultural, it is historical, they are not used to the idea of putting their business in the hands of foreign companies. This is much more down to us to solve than down to governments to solve. Governments can pave the way but we have got to do it. There is a massive problem of convincing Japanese buyers that they can rely on the quality, supply and all the other issues that they think are important in a foreign company so that is a new area of focus and it is very much what the export promotion programme for the DTI by the British Overseas Trade Board has been about. This visit ought to give new impetus to that coming as it does right behind the new Hosokawa package which focuses very much on getting the Japanese consumer to have some of the benefits of the high yen. They are not doing it at the moment; margins are still high, the cost of imported products is absurdly high and there are still plenty of restrictive practices around in the retail and wholesale trade and it is nice, I think, to see the growth of some of the discounters who are now emerging in Japan who are sticking a knife into the soft underbelly of a rather fat distribution system and they are getting a lot of encouragement which is important.

PRIME MINISTER:

Let me just add a word or two from my perspective:

This is overwhelmingly though not exclusively a trade-related trip. The trade relationship we have with Japan has grown very dramatically; all of you will be familiar with the inward investment we have seen in the North-East, in Wales and elsewhere but I think the time has come when we need to give that trading relationship a fresh emphasis and a fresh push and there are a variety of reasons why now is a good time to do that: the new Hosokawa Government is one, I will be the first overseas visitor, I think, that he has received; the fact that the Japanese are becoming increasingly concerned about the scale of their trade surplus, as others are, renders it another ideal opportunity for us to push the case for British exports and for British investment.

There are a number of particular matters that clearly one will raise when we are there. I shall raise the GATT Round and the importance of making sure we get a satisfactory settlement there; there are still some Japanese problems on GATT that need to be solved. There are a series of other matters that you would he extremely surprised if I didn’t raise; I need not run through a long list of them but whisky springs immediately to mind. On the last visit I had to Tokyo eight or nine weeks ago, the external tariffs on whisky disappeared but there still is a very discriminatory internal tariff on whisky – you can argue whether it is three times as high or ten times as high but there is no doubt that on whisky in particular and spirits there is a very high discriminatory internal tariff and that is the sort of matter I will be discussing with them.

We certainly want to see what we can do to close the very substantial trade gap; it is something like £5 billion. I think there is ample scope for us to see that close.

We have on this trip as high-powered a delegation of senior British businessmen as I think can ever have left the United Kingdom together; they will not be novitiates in Japan; many of them will have had a relationship for a long time and they will be there to develop longer-term themes. Whereas in India we were looking at the prospects of a series of contracts that we might or might not have got in the very short-term – as it happened on the Indian trip we did get them – here we are looking at a longer-term perspective rather than short-term contracts so on the business front that is the sort of thing we will be discussing.

There will be a meeting with the Kaidonran [phonetic] for the businessmen and I, and I hope that will be a successful meeting. I have a fairly lengthy meeting with the Prime Minister and all the businessmen will join me afterwards and we hope this will play some part in opening a few doors and speeding up some decisions.

On other matters, there are some bilateral matters and there will be some political matters we wish to discuss. We will certainly discuss the question of the prisoners of war issue but I don’t propose to go into details of that at this moment but there are a range of bilateral issues like that.

QUESTIONS AND ANSWERS

QUESTION (Gordon Grieg, Daily Mail):

Do you think that the controversy in the Conservative Party about your leadership tends to undermine the importance of a trip like this?

PRIME MINISTER:

No, I don’t and I very much doubt that Mr. Hosokawa and I will give it a passing thought.

QUESTION (Gordon Grieg, Daily Mail):

But the Japanese press might!

PRIME MINISTER:

I can’t answer for the press.

QUESTION (Gordon Grieg, Daily Mail):

So you don’t think it is a diversion at all?

PRIME MINISTER:

I am here to discuss trade and that is what I will be doing.

QUESTION:

Are you a little worried that this is perhaps a slightly inconvenient time for you to be abroad for so long? Some of your colleagues at Westminster are a little worried that you are going to be out of the country for a week and things are looking a bit dodgy.

PRIME MINISTER:

I am glad you confirm they need me so much!

QUESTION (Mark Webster, ITN):

Do you personally favour the idea of some form of compensation for the POWs? Although I appreciate you can’t discuss it publicly, do you personally feel that some form of compensation would be appropriate?

PRIME MINISTER:

I am going to discuss the matter in a way I think is most appropriate and that is to express views directly to the Prime Minister.

QUESTION:

Mr. Perry, British trade delegations have been coming to Japan for about the last thirty years and it has made no appreciable impact on the balance of trade. They seem to have a great tradition of buying Japanese. What makes you think you are going to change anything?

MR. PERRY:

Of course that is right but there has been a great deal of movement. When I started doing this sort of thing about ten years ago we were talking all the time about trade disputes, about massive problems of access, built-on tariff barriers, non-tariff barriers, quotas, every kind of impediment. They have in the course of a decade been quite literally swept away.

What has happened is that our exports to Japan have gone up in a three-to–four-year period by 18%, the first half of this year up another 13%. I think we have got to build on positions of that kind.

The point you are making is a very fair one. We will not succeed by browbeating either Japanese officials or Japanese customers. If you are a customer, you are not going to succumb to being browbeaten by a supplier; you are going to be persuaded by a supplier eventually on a set of criteria that you will set, nobody else.

QUESTION:

But isn’t that the Japanese method, browbeating?

MR. PERRY:

I don’t think so. I have been doing trade there for a long time. I have encountered no real barriers to selling superior products.

PRIME MINISTER:

Can I just add one word to that last point? I forget which of the businessmen said it to me last night but I think it is germane and I suspect Michael will strongly agree with it. It is quite difficult to get into the Japanese market in the first place; it takes a long time; you don’t just make one visit and they sign up huge contracts but as he put it to me, the more you get into the Japanese market the easier it is to do further business and there is a very dramatic growth in the business. It is very much a long-run game and I think this is part of accelerating that. I hope it will help to show how strongly the Government is behind the British export effort and the British investment effort hut it isn’t something that one expects suddenly to happen overnight and dramatically but the growth in exports over the last few years has been pretty astonishing. Michael quoted a three-year figure; I think it is just over 14% in the last fifteen months or so it is on an escalating trend and I hope we can give it another push because they are keen to import, I am keen to encourage them to provide import incentives and to remove any cultural discrimination that there may be – in the case of things like whisky, taxation discrimination.

QUESTION:

On GATT, although there are problems with the Japanese, is there anything of a magnitude that could derail the whole Uruguay Round as compared with the problems between America and the EC which clearly could?

PRIME MINISTER:

I think it is most unlikely. There are a series of problems with Japan, rice is the most obvious one but there are others as well but I would be astounded if it were a Japanese problem that brought the GATT Round to an unsuccessful conclusion, absolutely astounded. I think at the moment the Japanese are waiting to see what happens in the disputes over Blair House and on agriculture and on one or two other high-tariff problems between the United States and Europe but once that is out of the way, although there are some quite painful decisions – rice is the most painful – I don’t have any doubt at all that the Japanese would reach a conclusion and that they would not block a GATT Round.

QUESTION:

I just wanted to go back to the question of your leadership, Prime Minister. You were quoted recently as saying that you would leave your job when we least expected it and some of your critics inside the party have been suggesting that that could be quite soon. Can you give us a pledge that you will not be leaving quite soon, that you will be staying on until the next election?

PRIME MINISTER:

I think you misread what was said but I think you can expect to be having conversations like this with me for quite a long time ahead. I look forward to them very much.